Walmart stops accepting Visa cards in Canada

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Over the weekend, Walmart announced plans to stop accepting Visa credit cards at all of its Canadian retail locations as a result of "unacceptably high" fees, indicating rising tensions between the two firms.

The firm will roll out the change in phases across its Canadian locations beginning in mid-July. Walmart Canada will continue accepting Interac, MasterCard, American Express, and Discover. The move won't affect Walmart's US retail stores, according to Reuters.

Credit card fees are expensive. Charges for accepting Visa cards in Canada amount to 1.42%-2.08% of the value of the each transaction, according to CBC. Walmart Canada pays CAD$100 million ($78.1 million) in card fees per year. Walmart competes with other retailers on price — it has more margin to play with if it reduces card fees.

The impact on Visa won't be significant. In the US, 70% of Walmart's card purchases come from debit cards and a similar percentage of the retailer's transactions could come from debit in Canada as well. If that's the case, Visa cards may not account for much of Walmart's sales in Canada since Interac is the primary debit brand used by Canadian consumers for purchases at the point-of-sale. It's unlikely that Walmart would make it significantly harder for customers to pay, in order take ground in its ongoing feud with Visa. Visa had $214 billion in purchase volume in Canada in 2015. That's just over 4% of Visa's total purchase volume.

Swipe fee-related tensions between Walmart and Visa have been steadily escalating. Last month, Walmart sued Visa because of a policy that requires the retailer to allow consumers to choose between PIN and signature authentication for debit transactions. And in March, Walmart sued Visa in Arkansas over "excessively high swipe fees," according to CBC.

This could be a bargaining move on Walmart's part to put pressure on Visa to negotiate better fees across the board, according to the Financial Post. In response to the ban, Visa released a statement expressing disappointment that Walmart isn't prioritizing consumers, and noted that it offers one of its lowest Canadian rates to Walmart, according to Reuters.

This split is just one more shift in the ever-changing payments ecosystem, which is continually evolving thanks to new partnerships and the rise of mobile wallets.

Evan Bakker and John Heggestuen, analysts at BI Intelligence, Business Insider's premium research service, have compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.

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2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.

Payments is an extremely complex industry. To understand the next big digital opportunity lies, it's critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.

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Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.

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Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.

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